UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| x | Soliciting Material Pursuant to Section 240.14a-12 | |
Whiting Petroleum Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Whiting Petroleum Corporation
ENERGY + TECHNOLOGY = GROWTH
Evolution of the Bakken Play Through the Whiting Lens
Energy Finance Discussion Group October 14, 2014
Mark Williams
SVP, Exploration & Development Whiting Petroleum Corporation
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Forward-Looking Statements, Non-GAAP Measures, Reserve and Resource Information
This presentation contains statements that Whiting Petroleum Corporation (“Whiting”) believes to be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements other than historical facts, including statements regarding the expected benefits of Whiting’s proposed acquisition (the “Acquisition”) of Kodiak Oil & Gas Corp. (“Kodiak”) to Whiting and Kodiak and their shareholders, the anticipated completion of the Acquisition or the timing thereof, the expected future reserves, production, financial position, business strategy, revenues, earnings, costs, capital expenditures and debt levels of the combined company, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. These risks and uncertainties include, but are not limited to: the ability to obtain shareholder and court approvals of the Acquisition; the ability to complete the proposed Acquisition on anticipated terms and timetable; Whiting’s and Kodiak’s ability to integrate successfully after the Acquisition and achieve anticipated benefits from the Acquisition; the possibility that various closing conditions for the Acquisition may not be satisfied or waived; oil and natural gas prices; level of success in exploration, development and production activities; the impacts of federal and state laws; the impacts of hedging on results of operations; uncertainty regarding future operating results and plans, objectives and expectations; and other risks described under the caption “Risk Factors” in Whiting’s and Kodiak’s Annual Reports on Form 10-K for the period ended December 31, 2013, Quarterly Reports on Form 10-Q for the three months ended June 30, 2014 and Kodiak’s Quarterly Report on Form 10-Q for the three months ended March 31, 2014. Whiting assumes no obligation, and disclaim any duty, to update the forward-looking statements in this communication.
Whiting’s production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
In this presentation, we refer to Adjusted Net Income, Discretionary Cash Flow and EBITDAX, which are non-GAAP measures that the Company believes are helpful in evaluating the performance of its business. A reconciliation of such non-GAAP measures to the relevant GAAP measures can be found at the end of the presentation.
Whiting uses in this presentation the terms proved, probable and possible reserves. Proved reserves are reserves which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Probable reserves are reserves that are less certain to be recovered than proved reserves, but which, together with proved reserves, are as likely as not to be recovered. Possible reserves are reserves that are less certain to be recovered than probable reserves. Estimates of probable and possible reserves which may potentially be recoverable through additional drilling or recovery techniques are by nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company.
Whiting uses in this presentation the term “total resources,” which consists of contingent and prospective resources, which SEC rules prohibit in filings of U.S. registrants. Contingent resources are resources that are potentially recoverable but not yet considered mature enough for commercial development due to technological or business hurdles. For contingent resources to move into the reserves category, the key conditions or contingencies that prevented commercial development must be clarified and removed. Prospective resources are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This class represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development projects prepared. Estimates of resources are by nature more uncertain than reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company.
Energy + Technology = Growth
NYSE: WLL
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Summary
Whiting Recent Developments
Bakken Overview
Bakken Unconventional Reservoir Characterization
Maximizing Recovery Efficiency
Development Strategy
Energy + Technology = Growth
NYSE: WLL
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Whiting Overview
Whiting Petroleum Corporation is an independent oil and gas company that explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain and Permian Basin regions of the United States. The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota, the Redtail Niobrara play in northeast Colorado and its enhanced oil recovery field in Texas. The Company trades publicly under the symbol WLL on the New York Stock Exchange.
Q2 2014 Production 109.8 MBOE/d
Proved Reserves(1) 438.5 MMBOE
% Oil Reserves(1) 79% (89% Liquids) R/P Ratio(2) 13 years
(1) Whiting reserves at December 31, 2013 based on independent engineering.
(2) R/P ratio based on year-end 2013 proved reserves and 2013 production.
Energy + Technology = Growth
Whiting Petroleum Corporation’s Solberg 34-11 Tripad wells with Nabors drilling rig B15 on the Zalesky 34-8 Tripad, in background.
NYSE: WLL • Whiting Recent Developments
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A Focused Company
Q2 2014 Net Production 109.8 MBOE/d
NYSE: WLL • Whiting Recent Developments
Williston Basin
Bakken / Three Forks 80,195 BOE/d (Q2 2014)
Redtail
Niobrara A and B 7,235 BOE/d (Q2 2014)
HEADQUARTERS
Denver, Colorado
North Ward Estes
Over 9,600 BOE/d (2014) 110 MMBOE Proved Reserves(1) 104 MMBOE P2 + P3 Reserves(1)
Major Asset Areas
(1) At December 31, 2013 based on independent engineering. Energy + Technology = Growth
11% 3%
86%
Rocky Mountains Permian Other
Bakken / Three Forks Production
100.0
80.2
80.0
63.5
60.0 48.9
30.3
40.0 26.3
16.8
20.0
-
2009 2010 2011 2012 2013 Q2 MBOE/d 2014
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Capital Budget for Key Property Areas in 2014
2014 Mid-Point Production Growth Guidance of +20%
NYSE: WLL • Whiting Recent Developments
Exploration Well Work, Misc. Northern Rockies Facilities Expense (2) $1,101 MM
Costs, Other $151 MM $72 MM $150 MM
Land $116 MM
Non-Operated $332 MM
Other Exploration Drilling
$44 MM
Libby Ranch CO2 Development
$56 MM(1) EOR Project (3) $203 MM
Central Rockies $575 MM
(1) For development of CO2 prospect at Bravo Dome in northeastern New Mexico. (2) Comprised primarily of exploration salaries, lease delay rentals and seismic activities.
(3) This multi-year CO2 project involves many re-entries, workovers and conversions. Therefore, it is budgeted on a project basis not a well basis.
Energy + Technology = Growth
2014 CAPEX Gross Net % of Property Area (MM) Wells Wells Total
Northern Rockies 1,101 199 137.2 39%
Central Rockies 575 120 104.9 21% EOR Project 203 NA(3) NA(3) 7% Libby Ranch CO2 Develop. (1) 56 2% Other Exploration Drilling 44 9 7.3 2%
Non-Operated 332 12%
Land 116 4%
Facilities 151 5% Exploration Expense (2) 72 3% Well Work, Misc. Costs, Other 150 5%
Total Budget $2,800 328 249.4 100%
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Announced Strategic Combination with Kodiak Oil & Gas Corp. Creates Leading Williston Basin Operator
NYSE: WLL • Whiting Recent Developments
Acreage Overview (855,000 net acres)
Source: Company presentations, filings and press releases
1 As of December 31, 2013
2 Rigs currently drilling on July 13, 2014 per NDIC
3 As of July 13, 2014, Whiting had two additional rigs moving and Kodiak had one additional rig moving, for a combined operated 21 rigs in the Williston Basin
Q1’14 Bakken / Three Forks Net Production (Mboepd)
PF Whiting CLR EOG1 Whiting HES XOM/XTO COP STO OAS MRO Kodiak QEP
PF Whiting CLR HES OAS XOM/XTO Whiting COP QEP EOG Kodiak STO MRO
107.3 97.5
86.0
73.3 63.0 ~60.0
54.0 49.4
42.9 42.7
34.0 31.1
Rigs drilling in the Williston Basin (as of 7/13/14)2,3
18 18 18
14 14 12 10 8 7
66 5
Energy + Technology = Growth
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Expected benefits to Whiting
Increases weighting of production from Bakken/TFS
– 80% of pro forma Q1 2014 production from Bakken/TFS
– 855,000 combined net acres, with an inventory of 3,460 net Williston Basin drilling locations
– Addition of complementary acreage position in area Whiting knows very well
Significantly enhanced growth potential from accelerated development of Kodiak resource base
– Expect to increase Kodiak’s rig fleet from 7 to 12 operated rigs by Q4’15
– Substantial present value benefit from acceleration
Materially increased scale enhances relative positioning of company vs. peers and strengthens Whiting’s credit profile and financial flexibility
All-stock transaction structure is credit enhancing
Expected to be accretive in 2015 and increasingly accretive thereafter across all metrics
– Discretionary cash flow per share
– Earnings per share
– Production per share
Energy + Technology = Growth
NYSE: WLL • Whiting Recent Developments
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Bakken / Three Forks Stratigraphy
Sanish/Parshall Field Area Eastern Williston Basin
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Energy + Technology = Growth
NYSE: WLL • Bakken Overview
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Williston Basin Highlights
June 30, 2014
NYSE: WLL • Bakken Overview
STARBUCK
CASSANDRA
SANISH & PARSHALL
TARPON
MISSOURI BREAKS
HIDDEN BENCH
LEWIS
& CLARK
BIG ISLAND
Pronghorn
Field Target Gross Acres Net Acres
Pronghorn
Sanish / Parshall Middle Bakken 174,665 82,462 Three Forks Pronghorn Sand 180,911 116,848
Lewis & Clark Three Forks 172,009 118,039
Hidden Bench Middle Bakken 61,024 37,667 Three Forks Tarpon Middle Bakken 8,805 6,267 Three Forks Starbuck Middle Bakken 52,020 42,707 Three Forks Red River Missouri Breaks Middle Bakken 93,678 66,956 Three Forks Cassandra Middle Bakken 29,827 13,953 Three Forks Big Island Red River 166,126 135,122
Other ND & Montana 120,892 54,141
Total 1,059,957 674,162
Energy + Technology = Growth
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Bakken Oil Production
NYSE: WLL • Bakken Overview
25% Annual Increase
Source, U.S. Energy Information Agency – September 2014
Energy + Technology = Growth
thousand barrels/day 25% Annual Increase
1 200 100 800 600 400 200 0
2007 2008 2009 2010 2011 2012 2013 2014
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Bakken Oil Production
NYSE: WLL • Bakken Overview
Source, U.S. Energy Information Agency – September 2014
Energy + Technology = Growth
Bakken Region
New-well oil production per rig Rig count
barrels/day rigs
600 500 400 300 200 100 0
2007 2008 2009 2010 2011 2012 2013 2014
250 200 150 100 50 0
new-well oil production per rig
rig count
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Reservoir Characterization
Determine mobile fraction of Oil in Place (MOIP)
NYSE: WLL • Bakken Unconventional Reservoir Characterization
Molecular Diameters of Common Hydrocarbons
Nanometer Micrometer
1 1
Unconventional Oil Reservoirs (Effective)
Conventional Oil Reservoirs
Unconventional Oil Reservoirs (non-effective)
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Reservoir Characterization
Determine mobile fraction of Oil in Place (MOIP)
Core Layout Facility
Logging / Calibration
Sample Selection
Collaboration & Training
Environmental SEM / Qemscan
Micron-scale Resolution
Rapid Analysis
Alter Atmospheric Conditions
Quantitative Mineral Composition & Abundance
Focused Ion Beam SEM
Nanometer- scale Resolution
Dual Beam Technology
3D Textural Analysis
Reservoir Pre- qualification
Reservoir Characterization
In-house Facility
High Volume Operated + Non- op Core
Over 150 Cores Reviewed
Mineral Model
Petrophysical Calibration
Accurate Log Analysis
Porosity resolution problematic in tight reservoirs
3-D Textural Model
Kerogen Volume & Distribution
Porosity Volume & Distribution
Detailed pore throat geometry and size
NYSE: WLL • Bakken Unconventional Reservoir Characterization
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Middle Bakken / Niobrara Reservoir Comparison
High-resolution pore structure image from Scanning Electron Microscope
NYSE: WLL • Bakken Unconventional Reservoir Characterization
5 µm 5 µm
7% Porosity 13% Porosity
9985’
Middle Bakken B Facies Braaflat 11-11 Sanish Field Mountrail County, ND
5580.2’ Niobrara B Chalk Terrace 36-32M
Redtail Area Weld County, CO
Energy + Technology = Growth
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Maximizing Recovery Efficiency
Improving Frac Distribution
NYSE: WLL • Maximizing Recovery Efficiency
Older Style Sliding Sleeve Completion
Potential Frac Ports Entry Annulus Stages per Stage Points
Free fluid between packers 30 1 30
New Style
Cemented Liner Completion
Perforation Potential Clusters Entry Annulus Stages per Stage Points
Cemented 40 3 120
Energy + Technology = Growth
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Maximizing Recovery Efficiency
Improving Frac Distribution with Cemented Liners
NYSE: WLL • Maximizing Recovery Efficiency
Williston Basin
Side-by-Side Comparison of Cemented Liner vs Open-Annulus Completions in the Middle Bakken
106% Increase in IP
75% Increase in 30 day cum
Sundheim Fed 24-35-1H (Whiting)
- Uncemented Liner Sundheim 21-27-1H (Whiting)
- 30 stage – sliding sleeve—Cemented Liner & Slick Water
- IPF 583 BOEPD—35 stage – plug & perf
- 30-day Cum: 17.0 MBOE
Barter 21-3H (Whiting)
- Uncemented Liner Glen 28-33 1H (Brigham)
- 30 stage – sliding sleeve—Uncemented Liner
- IPF 476 BOEPD—36 stage – plug & perf
- 30-day Cum: 9.7 MBOE
Sundheim 31-2-1H (Whiting)
- Cemented Liner
- 30 stage – plug & perf
- IPF 1093 BOEPD
Hidden Bench
Missouri Breaks
41% Increase in IP 71% Increase in 30 day cum
Eide 41-13-2H (Whiting) Mullin 21-24-1H (Whiting)—Cemented Liner
- Uncemented Liner—30 stage – plug & perf
- 30 stage – sliding sleeve—IPF 3795 BOEPD
- 60-day Cum: 14.7 MBOE
Eide 41-13HR (Whiting) Weber 24-30-1H (Whiting)—Uncemented Liner
- Cemented Liner—30 stage – sliding sleeve Planned Higher
- 30 stage – plug & perf—IPF 2715 BOEPD
- 60-day Cum: 25.2 MBOE Density Pilot
Locations
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Evolution of Completion Design
Skov 31-28 Unit(1) at Missouri Breaks
NYSE: WLL • Maximizing Recovery Efficiency
Entry Cost IP
Well Annulus Completion Method Stages Points ($MM) Incr. (BOEPD) Incr.
1 Skov 31-28-1H Open Sliding Sleeve 30 30 7.90 - 927 -
2 Skov 31-28-2H Cemented P&P - 3 clusters/stage 30 90 8.10 3% 1,072 16%
3 Skov 31-28-4H Cemented P&P - 5 clusters/stage 30 150 8.10 3% 1,219 31%
4 Skov 31-28-3H Cemented CT ?Multistage+(P&P -5) 60+5X5 85 8.80 11% 1,607 73%
CT (Coiled Tubing) Conveyed Frac
1 2 4 3
(1) Skov 31?28?1H was completed on 5/31/2013. Skov 31-28-2H and Skov 31-28-4H were completed on 4/2/2014. Skov 31-28-3H was completed on 4/1/2014.
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Energy + Technology = Growth
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Evolution of Completion Design
NYSE: WLL • Maximizing Recovery Efficiency
Completion Entry Technique Points
Pre-2013 Ball & Sleeve 30
March 2013 Cemented Liner up to 120
40 stages x3 perf clusters/stage
March 2014 Cemented Liner up to 200
40 stages x5 perf clusters/stage
March 2014 Coiled Tubing Conveyed 85
Plug & Perf (Skov 31-28-3H)
April 2014 Slick Water 90
30 stages x3 perf clusters/stage (Sundheim 21-27-1H)
Energy + Technology = Growth
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Exploiting the Bakken and Three Forks in the Williston
Primary and Prospective Drilling Locations
NYSE: WLL • Development Strategy
MISSOURI BREAKS CASSANDRA SANISH
8 WELLS 12 WELLS 15 WELLS
HIDDEN BENCH PRONGHORN TARPON
16 WELLS 6 WELLS 12 WELLS
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Energy + Technology = Growth
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Bakken/Three Forks Resource Potential
NYSE: WLL • Maximizing Recovery Efficiency
Productive Area (sq. mi.) 13,100 Acres 8,384,000 1,280 acre spacing units 6,550
EUR per Well (Mboe)
200 250 300 350 400 450 500 550 600
4 5,240,000 6,550,000 7,860,000 9,170,000 10,480,000 11,790,000 13,100,000 14,410,000 15,720,000 Wells 6 7,860,000 9,825,000 11,790,000 13,755,000 15,720,000 17,685,000 19,650,000 21,615,000 23,580,000
8 10,480,000 13,100,000 15,720,000 18,340,000 20,960,000 23,580,000 26,200,000 28,820,000 31,440,000 per 10 13,100,000 16,375,000 19,650,000 22,925,000 26,200,000 29,475,000 32,750,000 36,025,000 39,300,000 Unit 12 15,720,000 19,650,000 23,580,000 27,510,000 31,440,000 35,370,000 39,300,000 43,230,000 47,160,000
14 18,340,000 22,925,000 27,510,000 32,095,000 36,680,000 41,265,000 45,850,000 50,435,000 55,020,000
16 20,960,000 26,200,000 31,440,000 36,680,000 41,920,000 47,160,000 52,400,000 57,640,000 62,880,000
Increasing Technology
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Break More Rock!
NYSE: WLL
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Important Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of a vote or proxy. The proposed transaction anticipates that the Whiting shares of common stock will be exempt from registration under the United States Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(10) of the Securities Act. Consequently, the Whiting shares will not be registered under the Securities Act or any state securities laws. In connection with the proposed transaction, on October 6, 2014, Whiting and Kodiak each filed with the SEC an amended preliminary joint proxy statement/circular. The joint proxy statement/circular is not final and is subject to change. Once final, a definitive joint proxy statement/circular will be filed with the SEC.
INVESTORS ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT AND CIRCULAR AND ANY OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT WHITING, KODIAK AND THE PROPOSED TRANSACTION. The joint proxy statement and circular and certain other relevant materials (when they become available) and other documents filed by Whiting or Kodiak with the SEC may be obtained free of charge at the SEC’s website at http://www.sec.gov. In addition, investors may obtain copies of these documents (when they become available) free of charge by written request to Whiting Investor Relations, 1700 Broadway, Suite 2300, Denver, CO 80290-2300 or calling (303) 390-4051 or by written request to Kodiak Investor Relations, 1625 Broadway, Suite 250, Denver, CO 80202 or calling (303) 592-8030.
Participants in the Solicitation
Whiting, Kodiak and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about the executive officers and directors of Whiting and the number of shares of Whiting’s common stock beneficially owned by such persons is set forth in the proxy statement for Whiting’s 2014 Annual Meeting of Stockholders which was filed with the SEC on March 23, 2014, and Whiting’s Annual Report on Form 10-K for the period ended December 31, 2013. Information about the executive officers and directors of Kodiak and the number of Kodiak’s ordinary shares beneficially owned by such persons is set forth in the proxy statement for Kodiak’s 2014 Annual Meeting of Shareholders which was filed with the SEC on May 9, 2014, and Kodiak’s Annual Report on Form 10-K for the period ended December 31, 2013. Investors may obtain additional information regarding the direct and indirect interests of Whiting, Kodiak and their respective executive officers and directors in the transaction by reading the joint proxy statement and circular regarding the transaction when it becomes available.
NYSE: WLL
Energy + Technology = Growth
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